Underachievers like Sony likely will escape the trend, but the rising number of Japanese management buyouts will reduce the number of stocks. That's good for investors.

Japan has about 3,500 publicly listed companies, but David Baran thinks there really should be fewer than 2,500. A third of Japan's public companies, he says, would be better off privately owned and run.

Baran, Tokyo-based co-CEO of the hedge fund Symphony Financial Partners, isn't the only one who believes that. Perennially slumping prices of public shares, cheap bank financing, and changing attitudes have spurred an increase in Japanese management-led buyouts, or MBOs, where investors team up with executives to take...